Sunday, March 29, 2009

They say that in bad financial times like these, it's a time to buy when things are less expensive and there is a lot of competition in the market.

I have not been actively looking to buy any more houses. I already own seven houses (including the one in which we live) and a condo. Why so many? I actually lived in each of these homes as I renovated them from the inside to outside, making them liveable, comfortable homes. They are all within a few blocks of one another, in an old, mature neighborhood that is convenient to public transit and shopping. As I moved on, I put the previous house in a rental inventory that is dedicated to affordable housing for community heroes (cops, firefighters, teachers.)

Over 33 years since I bought my first "Harry-Homeowner Special," I have learned a thing-or-two about determining if a house is worth fixing up and renting.

Last week, one of my tenants called to say that the house next to his had been vacant for some time. He said he thought he saw a truck hauling off what remained of the household contents a few months ago. He was concerned about the blight of a vacant property, which has become an eyesore and possibly worse.

I decided to look the property up in on-line records, and what did I discover but on the day I checked, the property converted to "bank owned," meaning it was being foreclosed. I did more research, called some people, and found that the previous owners owed lots of money to lots of people, and probably skipped town. The bank that assumed ownership of the property, like most banks, really didn't want it.

I put on my thinking cap. I checked the amount of back taxes that were due -- not bad, considering. I dropped by the house after work and walked around it. The "outside bones" looked decent. New(er) roof, decent paint job, working gutters and downspouts, no broken windows, or other visible signs of damage. Sure, there were signs of neglect, but those things are minor and can be easily and quickly fixed.

I called the bank the next morning. After a couple hours of transfers and annoying "press-this-for-that" automated answering systems, I finally reached a live human being in the United States (a rarity these days) who was willing to talk to me about the property. He arranged for me to visit the property and inspect it. I brought along a good friend who is a professional home inspector. We found nothing materially wrong with the house -- in fact, it was in excellent condition considering it had been abandoned and neglected.

It was time to act. I turned to the bank representative and made an offer based on what I knew about overdue taxes and the real-estate assessment. He couldn't accept the offer then-and-there, but the next morning, I got a call from a higher-up at the bank, and we negotiated the terms. I got a really sweet deal because the bank did not want to carry another house in their already overburdened inventory of foreclosed properties.

I went to settlement yesterday, and my partner and I will be spending the day today (Sunday), cleaning up and preparing a list of actions that will be necessary to get the house into good shape for occupancy. I have a great renovation and construction estimating program on my laptop that covers all the details, down to the number of pounds of screws and nails that will be required.

Next... I pursue getting the property listed on the inventory for affordable housing so it can be made available for rent by more community heroes. Check back later!